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P5-4 Investment analysis; uneven cash flows LO5-3, LO5-8 Helga is considering the purchase of a small restaurant. The purchase price listed by the seller is
P5-4 Investment analysis; uneven cash flows LO5-3, LO5-8 Helga is considering the purchase of a small restaurant. The purchase price listed by the seller is $800,000. Helga has used past financial information to estimate that the net cash flows (cash inflows less cash outflows) generated by the restaurant would be as follows: If purchased, the restaurant would be held for 10 years and then sold for an estimated $700,000. Required: Assuming that Helga desires a 10% rate of return on this investment, should the restaurant be purchased? (Assume that all cash flows occur at the end of the year.)
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